Deutsche Bank Securities Services in Singapore and Singapore fintech STACS have completed their proof-of-concept (PoC) project on the use of distributed ledger technology (DLT) for digital assets and sustainability-linked bonds.
Set in the context of tokenized securities in the securities market, the teams worked on digital assets interoperability across platforms and related custody, digital securities and cash delivery-versus-payment practice, DLT to traditional systems connectivity, operating model evolution and smart contract templates, including those involving sustainability-linked digital bonds.
Deutsche Bank Securities Services and STACS were awarded the PoC grant in October 2020, which provides funding support for experimentation, development and dissemination of nascent innovative technologies in the financial services sector. The grant is part of the Financial Sector Technology and Innovation scheme under the Financial Sector Development Fund administered by Monetary Authority of Singapore.
Deutsche Bank’s expertise and technical designs were combined with STACS’ live DLT platform, which allows for end-to-end bonds lifecycle management. The PoC’s results were subsequently tested with industry participants – UBS, Malaysia National Stock Exchange Bursa Malaysia, and Union Bank of the Philippines whose perspectives enriched the PoC with more holistic assessments.
Through their involvement, Deutsche Bank and STACS were able to remodel and optimize the workflows involved to create a ‘bond in a box’ DLT platform, unlocking new efficiencies with rapid smart contracts issuances, and testing integration with payment modes like UBIN and Diem, digital custody and asset servicing, and environmental, social and governance (ESG) financing transparency needs.
“This PoC allowed us to assess the practical handling of tokenized assets, as well as the opportunities and challenges that could arise from their commercialization in Singapore, and potentially in other markets,” says Anand Rengarajan, Asia-Pacific head of securities services at Deutsche Bank.
“We have taken the first step towards turning a proof of concept into a proof of commercialization, through our collaboration with Deutsche Bank, and with other leading financial industry participants,” adds Benjamin Soh, managing director at STACS. “In addition, with the world’s focus turning towards ESG and sustainability, we look forward to expanding our network’s efforts in the sustainability push of the next few decades, via DLT technology as the common technology infrastructural nexus.”